Dossier: Social media, economics and businessISSUE 2 (NOV 2014)

The new age of financial markets and their globalisation


The globalisation of financial markets has been based on several factors that have enabled their integration. Two of them are financial deregulation and free movement of capital. Especially relevant to this change has been technological progress regarding the connection between markets. This has encouraged and standardised systems for settling and compensating transactions, speeded up trading with integrated services from different markets, and improved the risk-benefit ratio for investors.

As a result of such big change in the economic environment as well as the financial system and its communication patterns, new innovative financial products have been developed. Their aim is to provide protection from growing volatility and increased risk in all financial transactions.

The negative side of globalisation and the high interconnection between markets is the contagion effect of financial crises. The most recent example is the sub-prime crisis that sparked off in the United States in 2007. This caused a drop in liquidity on the global credit market, which in turn affected the economy of several countries, and showed the weakness of the global financial system and its regulatory framework.

ICT;  contagion effect;  globalisation;  financial innovation;  financial markets; 
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